The Two Main Factors That Determine a Firm's Capital Structure

question 23

Multiple Choice

The two main factors that determine a firm's capital structure are:

• A) whether debt interest payments are tax deductible and how increased debt might affect the likelihood of the firm going bankrupt.
• B) whether debt interest payments are tax deductible and whether or not the bonds could be sold at a premium.
• C) whether the markets are perfectly efficient and whether or not all participants have symmetric information.
• D) none of the options.

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Definitions:

Active Artificial Immunity

Immunity acquired through the introduction of a vaccine containing a harmless form of a pathogen, prompting an immune response without causing the disease.

Immunization

Process by which a subject is rendered immune by deliberately introducing an antigen or antibody into the subject.

Hepatitis B

A serious liver infection caused by the hepatitis B virus that can become chronic and lead to liver cancer or cirrhosis.

Peyer's Patches

Specialized lymphoid nodules located in the wall of the small intestine, playing a key role in immune responses against ingested substances.